Business

Over 49 000 jobs lost in August

Another 49 306 jobs were lost in August, the fourth consecutive monthly decline, while only government created jobs, an employment index has shown.

Another 49 306 jobs were lost in August, the fourth consecutive monthly decline, while only government created jobs, shows to the latest Adcorp Employment Index.

“... while overall employment declined by 2.1% in August—the fourth consecutive monthly decline—employment by government continued to rise, by a notable 6.2%,” Adcorp said in a statement on Monday.

“Adcorp considers that one of the prime reasons for the nation’s dismal employment picture is that government is crowding out private sector participation in the economy.

“The public sector now accounts for all the job creation in the economy for 2011 as a whole,” said Loane Sharp, Adcorp labour market analyst.

August employment declined most sharply in the manufacturing (19.9%), mining (19.3%) and construction (16%) sectors.

“The unofficial sector continued to create jobs, employing 16 917 additional people in August, enhancing the ‘informalisation’ of the country’s workforce.”

Sharp said employment conditions remained “exceedingly weak”.

Temporary work up
South Africa had now lost 989 239 permanent jobs since the beginning of the 2008/09 recession.

This included 100 087 jobs lost since the economy began to recover in the post-recession period.

Sharp said temporary work could be considered a leading indicator of permanent employment conditions.

Job creation tends to lag improvements in the economy by between 24 and 36 months.

Permanent jobs—which made up 47.3% of all South African jobs—were only created when certain economic conditions, including sustained high economic growth, were met, he said.

“The upshot is that temporary work follows economic activity fairly closely since employers are able to use contract workers for fixed, typically short, durations on an as-needed basis.”

Sharp said temporary employment in South Africa represented 29.9% of total official employment.

Creation of temporary positions
Sharp said temporary employment data could be interpreted by looking at the number of hours worked by a temp in relation to the available hours per temp—or what is known as the capacity utilisation of temps.

“In August, the capacity utilisation of temporary staff—the number of hours actually worked in relation to the number of hours per temporary worker—dropped to 74.6%, a decline of 8.1% at an annual rate and the worst decline in four months,” Sharp said.

“Compared to a year ago, the number of temps increased by 4.5% in August but their average monthly working hours declined by 20.6%, prompting our ‘exceedingly weak’ prediction for the permanent jobs outlook.”

Sharp said when a temp’s capacity utilisation approached 100%, more temps would normally be employed.

“When the capacity utilisation of all temps across the country approaches 100%, it will usually be followed, either by the creation of more temporary positions, or by the use of permanent workers.”

This was seen between January and December 2010, as the South African economy grew following the 2008/09 recession.

“In January and February 2011, there was a brief lull in temp capacity utilisation, followed by resumed momentum during March and April.”

Sliding backwards
In the past four months, this capacity utilisation had declined from 98.3% in April to 74.6% in August, or the lowest level since February.

Sharp said this could suggest the South African economy was facing a further recession.

In response to Adcorp’s latest index, Democratic Alliance MP Ian Ollis said 2011 had turned out to be the opposite of the year of job creation as declared by President Jacob Zuma in his state of the nation address in February.

“At a time when we should be turning the jobs crisis around, we are sliding further backwards,” Ollis said in a statement.

“When the president said that 2011 would be ‘the year of the job’, he raised the expectations of millions of unemployed South Africans.

“Since then, he has dashed their hopes by failing to make the tough choices that would grow our economy and create millions of jobs.”

Ollis said if the DA were to run the country it would create jobs by introducing a youth wage subsidy, and by reforming labour laws to be more employment-friendly.

The party would also boost small business development by giving a tax holiday to newly established enterprises, and increasing investment in infrastructure maintenance and development, he said.—Sapa